2) Factbox: Indonesia’s Huge Papua Mine Run by Freeport Long a Source of Friction
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1) Jokowi meets Australian CEOs, shares confidence about Indonesia’s economy
Ina Parlina The Jakarta Post
Sydney | Sat, February 25, 2017 | 05:07 pm
Close friends: President Joko Widodo (second left) participates in a meeting with Australian business leaders in Sydney on Saturday. The President is on a two-day visit to Australia. (AP/Jason Reed)
President Joko "Jokowi" Widodo kicked off his two-day trip to Sydney on Saturday noon by meeting with CEOs of Australian multinational companies, during which he assured them about Indonesia’s supportive investment climate despite global and domestic challenges.
At the beginning of the meeting, Jokowi cracked a joke to break the ice, saying "I don't know how it is in Australia. But, in Indonesia, we sometimes work at weekends".
Citing upgraded outlooks recently released by various international rating agencies such as Moody's Investor Services, Jokowi assured the top executives, such as those from mining private equity firm EMR Capital, Marina Industrial Development and livestock exporter Austrex, that Indonesia is currently "enjoying very good investor sentiment”.
(Read also: Jokowi to visit Australia to boost trade after spat)
Earlier this month, Moody's revised the outlook on its ratings of Indonesian government debt from "stable" to "positive". Indonesia has also climbed 15 places to 91 in the World Bank's 2017 Ease of Doing Business index, from the previous rank of 106.
But, Jokowi also told the participants that the conditions related to the recent regional elections posed a challenge to the economy, particularly when a religion-driven massive rally occurred late last year against the backdrop of the Jakarta gubernatorial poll. The rally turned violent, forcing Jokowi to postpone his visit to Australia initially scheduled for November.
In the meeting, which later continued behind closed doors, the Australian businesspeople expressed confidence in “continuing their expansion in Indonesia", said Foreign Minister Retno Marsudi.
Australia’s investment in Indonesia reached US$168 million in 2015, with most going to mining and tourism sectors.
Retno also played down any concerns about domestic politics, saying that having regional elections run peacefully in 101 regions was an achievement for Indonesian democracy. "So, there is nothing to worry [about]," she added.
Australian Prime Minister Malcolm Turnbull is set to welcome Jokowi and First Lady Iriana in a private dinner at his residence on Saturday evening. (hwa)
Retno also played down any concerns about domestic politics, saying that having regional elections run peacefully in 101 regions was an achievement for Indonesian democracy. "So, there is nothing to worry [about]," she added.
Australian Prime Minister Malcolm Turnbull is set to welcome Jokowi and First Lady Iriana in a private dinner at his residence on Saturday evening. (hwa)
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2) Factbox: Indonesia’s Huge Papua Mine Run by Freeport Long a Source of Friction
By : Fergus Jensen | on 8:14 PM February 25, 2017
Freeport's Grasberg mine holds more gold and copper reserves than any other in the world, but has frequently been a source of controversy over the revenue share Indonesia and Papua get from the mine and the impact of its tailing on local water systems. (SP Photo/Primus Dorimulu)
US mining giant Freeport-McMoRan warned this week it could take the Indonesian government to arbitration and seek damages over a contractual dispute that has halted operations at the world's second-biggest copper mine.
Freeport's Grasberg mine holds more gold and copper reserves than any other in the world, but has frequently been a source of controversy over the revenue share Indonesia and Papua get from the mine and the impact of its tailings on local water systems.
Here are some facts on the Grasberg mine in Papua:
Grasberg mine
Freeport-McMoRan began mining in Papua in 1967, the first company to sign for mineral resource rights under a foreign investment law put in place by former President Suharto. Open-pit copper and gold mining at Grasberg began in 1990.
Mining at the open pit, which is visible from space, is due to cease in late 2018, when underground mining will become the main source of copper ore.
An estimated 94 percent of the mine's remaining reserves are recoverable only underground. As of December 2015, Grasberg accounted for 28 percent of Freeport's total recoverable proven and probable copper reserves of 99.5 billion pounds.
In 2017, the mine is expected to account for 1.3 billion pounds of Freeport's global copper sales of 4.1 billion pounds.
Labor and safety
Freeport employs more than 32,000 in Indonesia, including 12,000 employees and 20,000 contractors. Around 97 percent of its workers are Indonesian nationals, many of them Papuan.
The mine area suffers regular earthquakes, and torrential rainfall can trigger landslides. Its position on top of a mountain also means workers can suffer altitude sickness, and visibility is often poor due to thick mists.
At least partly because of these factors, safety at the mine has been a longstanding source of friction with unions. A tunnel collapse that killed 28 workers in 2013 raised worries about Freeport's plans to ramp up its underground mining operation.
Workers also staged a strike for three months in 2011, seeking a bigger slice of the revenue from record copper prices.
Security and taxes
Security at Grasberg has been volatile with pro-independence rebels in Papua waging a low-level conflict for decades. Analyst have also linked violence at or near the mine to conflicts between the police and military over security arrangements and related business ventures.
Between 2009 and 2015, shootings within the mine project area killed 20 and wounded 59. To protect workers and infrastructure, Freeport contributed $21 million toward government-provided security in 2015.
Freeport Indonesia is one of the largest taxpayers in Indonesia, with more than $16 billion paid to the government in royalties, taxes and dividends between 1992 and 2015.
The Freeport unit is currently in a dispute over $469 million in water taxes and penalties claimed by Papua province that date back to 2011.
The mine was at the centre of a scandal in 2015 after Indonesia's parliament speaker was accused of attempting to extort shares worth $1.8 billion from Freeport.
Setya Novanto denied the allegations but resigned amid the scandal in December 2015. He was reinstated in November last year after an investigation was dropped.
Economic impact
Freeport-McMoRan and Rio Tinto —which is entitled to a share of Grasberg output via a joint venture signed in 1995 — have been targeted by campaign groups over alleged human rights and environmental issues at Grasberg.
Rio Tinto has said it is considering exiting its interest in the mine, which has yielded no benefit for it since 2014, when exports were suspended for six months while Freeport negotiated mining and tax rules with Indonesia.
On Sept. 9, 2008 one of Rio Tinto's major shareholders, Norway's sovereign wealth fund, sold its entire $850 million stake in the company citing environmental damage at Grasberg.
Freeport was excluded by the Norwegian fund in June 2006 for the same reason.
Reuters
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